Apple stock (NASDAQ: AAPL) has gained almost 4% over the last week at near all-time highs of about $154 per share, driven by anticipation surrounding the launch of the company’s next generation of iPhones, which are likely due around the third week of September, and possibility of updates to other products including MacBooks, Apple Watches, and AirPods in the coming months. Bloomberg previously reported that Apple’s suppliers are prepping to build as many as 90 million new iPhones this year, a 20% bump over its initial production run for the iPhone 12, indicating that Apple anticipates robust demand for the device, despite it likely being an incremental upgrade over the iPhone 12 which saw a design overhaul.
So will Apple stock continue to trend higher over the coming weeks and months, or is a correction looking more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price data, returns for Apple stock average 2.4% in the next month (21 trading days) period after experiencing a 3.8% rally over the last five trading days.
But how would these numbers change if you are interested in holding Apple stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test AAPL Stock Chances Of Rise After A Fall And Vice-Versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
IF AAPL stock moved by -5% over 5 trading days, THEN over the next 21 trading days, AAPL stock moves an average of 1.7%, with a 54% probability of a positive return over this period.
Also, given a -5% movement for the stock over 5 trading days, it has historically witnessed an excess return of 2.9% compared to the S&P500 over the next 21 trading days, with a 64.4% percent probability of a positive excess return.
Some Fun Scenarios, FAQs & Making Sense of AAPL Stock Movements:
Question 1: Is the average return for Apple stock higher after a drop?
Consider two situations,
Case 1: Apple stock drops by -5% or more in a week
Case 2: Apple stock rises by 5% or more in a week
Is the average return for Apple stock higher over the subsequent month after Case 1 or Case 2?
AAPL stock fares better after Case 2, with an average return of 1.7% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.2% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Apple stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold Apple stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For AAPL stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
Question 3: What about the average return after a rise if you wait for a while?
The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
AAPL’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Apple stock by changing the inputs in the charts above.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016